Accounting Dictionary


How often goods in a store are sold and replaced with new inventory.

Generally, a higher the turnover means a higher the profit. Lakisha keeps $2000 worth of merchandise in her store. Her inventory turnover is 5. That means she sold $10,000 worth of goods (5 x $2,000). Jackson also keeps $2,000 worth of inventory. His turnover was 8. He sold $16,000 worth of goods (8 x $2,000). There’s a good possibility he made more money because he sold more goods in a one year period.

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